A study of the impact of driverless cars technology on the motor insurance market

Abstract

The purpose of this thesis was to glean how much the Maltese motor insurance market is prepared for driverless cars and to understand the perception of such technology by the Maltese general population. The primary objectives where to conduct a study to assess the perception of the Maltese population to driverless cars and to determine how much Maltese insurers are prepared for such a change, as well as consider the impact of driverless cars on motor insurance underwriting and claims handling. This research was done because there is a severe lack of awareness locally of a subject that could potentially have a drastic change in the Maltese motor insurance market. This topic is highly studied abroad as international insurers are preparing for this revolutionary technology. The research was conducted using both qualitative and a quantitative elements. A survey of 7 questions was created for the general public in which 108 respondents answered a variety of questions about their awareness as well as perception of driverless cars. The second part of the research involved two leading experts of the Maltese motor insurance market, who were interviewed and were asked 6 questions which consisted of questions regarding the Maltese motor insurance market and the impact of driverless cars on premiums and claims as well as the opportunities such technology offers. The results found were split into two parts. The first part of the results which corresponds with the quantitative part of the study showed that the general public is generally not informed enough about autonomous cars, although they view driverless cars as a safer alternative due to high amount of accidents caused by reckless drivers. The second part of results correspond with the qualitative part of the study with the insurance industry experts providing an insight on autonomous cars. The results show a lack of study by the Maltese motor insurance market with local insurers relying on the actions of their European counterparts. It was also found that claims are expected to decrease with driverless cars although their severity would rise significantly. Results also showed that there are still doubts about how the premium will be effected as well as confusion about who is ultimately responsible if a driverless car has an accident. The study’s foremost limitation is the size of the Maltese motor insurance market with few companies in the local market and a number limited of experts. Thus only two experts could provide their input for this study. The implications of such results show that the majority of the general public would react favourably to the introduction of such cars which thus would provide a faster transition from manual to self-driving cars. Furthermore, the lack of awareness shows that there is the need to make more information available. Moreover, there is a serious lack of study made by Maltese motor insurance companies which could be a serious liability problem in the future as this technology becomes more of a reality. The author highly recommends that Maltese insurers start taking initiative and do studies about this technology as it could change the industry even if it means working with larger insurance groups abroad to better understand this technology. At the end of the day driverless cars may be an opportunity or a threat. It is up to the Maltese insurers to decide which of these two it will be depending on how prepared they are to deal with this revolutionary technology.